What does the wholly domestically produced Scania look like?

Author | Zhang Lingxiao

Editor | Wang Shuangshuang

Jiangsu Rugao, which has failed to meet new forces in car manufacturing, seems to have welcomed a reliable player in its car manufacturing industry - Global Scania, a well-known commercial vehicle manufacturer.

On November 28, the unveiling ceremony of Scania’s Rugao production base was officially held. This production base is a brand-new factory 100% controlled by Scania after the Scania Group acquired Nantong Gaokai Automobile Manufacturing Co., Ltd., and was officially renamed "Scania Manufacturing (China)" on November 25. ) Co., Ltd."

This is currently the second wholly-owned commercial vehicle company in China, in addition to Hyundai Commercial Vehicle (Sichuan Hyundai before the change), which changed its equity. At the same time, it is also the only wholly domestically owned enterprise among the four major European commercial vehicle imported brands (Daimler, Volvo, Scania, and MAN).

According to He Mochi, President of Scania China Group, China-made Scania shares a mature and complete supplier system with other production bases around the world. At the same time, Scania will cultivate local parts companies in the process of localization and strive to achieve a localization rate of 80% of parts in the future. In terms of pricing, the price of domestically produced Scania products will maintain "global standards." In layman's terms, it means maintaining a high-end positioning and there is little room for product price reduction.

Scania, which is known as the "King of Roads" in the world, has been unable to break through the 10,000-unit mark in domestic sales for many years because of its high-end positioning. This seems to confirm the saying "quality versus quality". You can’t have both quantity and quantity.” Looking back at today's domestic market, commercial vehicles are making great strides into the National VI era. Under the wave of the "new four modernizations", independent commercial vehicle brands are launching an impact towards high-end development. Scania, which entered the game at this time, will inevitably have to compete head-on with its own brands after making domestic products. Can it exert the "catfish effect" like Tesla, which is also wholly domestically produced, or can it become a winner in the one-size-fits-all market? "shark"?

01

The expanding territory of TRATON

In 2018, the Volkswagen Group split its truck and bus divisions and established a subsidiary, TRATON. TRATON owns two major commercial vehicle giants, MAN and Scania. Volkswagen wants to use its group advantages to compete with Volvo and Daimler in the global commercial vehicle market.

In November this year, TRATON announced that it had completed the acquisition of Navistar for US$3.7 billion. Navistar is an internationally renowned truck manufacturer and an important player in the North American market. TRATON stated that since the sales of its Scania and MAN trucks are heavily dependent on the European and Latin American markets, the acquisition of Navistar is of great significance to TRATON's development of the North American market.

Matthias Gründler, CEO of TRATON, who just took office in July this year, declared, “So far, TRATON has occupied a leading position in the European and South American markets, but our goal is to become a leader in important global markets. Leader. ”

Judging from sales volume alone, TRATON, with its joint efforts, is still far from this goal. Taking sales in 2019 as an example, TRATON's brands sold a total of 242,000 trucks throughout the year. Daimler's truck sales reached 447,000 in the first 11 months alone; Volvo's single brand delivered 233,000 trucks throughout the year. It is worth noting that the domestic annual sales of Auman heavy-duty trucks produced by the domestic joint venture between Daimler and Foton have reached the highest level of 100,000, contributing one-sixth of Daimler's global annual truck sales.

Therefore, for TRATON, which is experiencing sluggish growth in its main battlefields such as Europe and Latin America, the Chinese market has become its "third pole" to tap new potential. In 2018, Steve Wager, the then general manager of Scania China, said that the Asian market was Scania’s third growth point after the European and Latin American markets, and the Chinese market accounted for the largest proportion of the entire Asian market. Share is the most important market among them.

02

"Deadly" high-end positioning

The Chinese market is important to global car companies , the opportunities and potential it contains are self-evident. Scania has also been exploring ways to implement localization.

In 2006, Scania and Higer Bus launched a dual-brand cooperation strategy in the form of "not a joint venture, only a cooperation". The "Scania Higer" dual-brand model category has expanded from tourist buses to public buses, focusing on high-end markets in various segments. In terms of cooperation, Scania provides chassis technology and Higer is responsible for vehicle manufacturing.

Why not choose joint venture production? He Mochi once said in an interview that Scania has never been involved in a joint venture, and that the business cooperation and technical cooperation model can maximize the advantages of both parties.

More than ten years have passed, and the domestic road bus market has been squeezed by high-speed rail. The rapidly developing logistics and transportation industries have become the direction for Scania to change lanes.

However, looking at the domestic heavy-duty truck market, almost all imported truck brands have "fallen" and have all merged with domestic brands, such as Daimler and Foton, MAN and SINOTRUK, Iveco and Hongyan, Hino and GAC wait. After all, the whole life cycle value concept proposed by imported trucks, in the face of the price of hundreds of thousands and high maintenance costs, most car buying groups still need to "think twice".

Therefore, He Mochi asserted that China's logistics and transportation industry has always been in a state of "stragglers" with low transportation efficiency. The efficient model of high purchase cost + low transportation cost created by Scania is not suitable for the current situation of the industry where users have weak purchasing power. "The high-end market takes time to cultivate, especially for companies like Scania that only make high-end products."

In He Mochi’s eyes, there are two important conditions for Scania’s domestic production. One is annual sales of 10,000 vehicles, and the other is changes in consumption concepts and consumption environment.

In today's environment that promotes efficient transportation, high-end heavy trucks are facing new development opportunities. Industry insiders pointed out that 2020 is the year when companies launch the largest number of high-end heavy trucks, and is regarded as a milestone in the high-end process of China's heavy trucks. For Scania, consumption upgrade also means new opportunities. Research institute Roland Berger pointed out that China's heavy-duty trucks have a clear trend towards high-end development. It is expected that by 2025, the proportion of models with a unit price of more than 400,000 yuan will reach 40%, and the penetration rate of advanced technology will continue to increase.

03

Investing in the next decade

For Scani, which insists on taking the high-end route For Asia, the benefits of wholly-owned domestic production to Scania are not only cost reduction, but also sufficient room for brand premium.

At the unveiling ceremony, He Mochi said: "China is now becoming more and more open, and the Chinese government is continuing to launch a series of measures to further promote economic reform and expand opening up. These measures continue to enhance China's economic resilience and Productivity. Coupled with the excellent operating economy, low emissions, safety and comfort that Scania brings to the market, it will be increasingly needed by the increasingly mature Chinese transportation industry. Therefore, we expect that next year. Within ten years, China will become our largest market in the world."

The word "fairness" in He Mochi's words has a profound meaning. In the domestic commercial vehicle market, especially in the field of trucks, independent brands with the prefix "国" occupy an absolute advantage in corporate procurement and the private market. Thanks to this, independent brands have formed a complete after-sales and service system in China. When independent brands are launching high-end strategies, the competition in the high-end market in the future will be a competition based on comprehensive strength.

For consumers, the domestically produced Scania means that they need to think about, "spend 500,000 to buy a self-owned brand or add an extra 100,000 to buy an imported brand", and the narrowing of the price difference may will change the competitive landscape of market segments.

A few years ago, Christopher Hansen, the then industrial design director of Scania Group, once declared: "Scania is oriented to the world and must ensure high-end product positioning and will not serve China." The market is considered individually". A few years later, Scania chose domestic production and stated, "After domestic production, Scania's delivery cycle will be greatly shortened, allowing Chinese users to have a better car delivery experience. It can also better respond to user needs and serve China." Users provide customized products.

"Is sole proprietorship of domestic products a reflection of the situation by the "big guys", or is it a final compromise to maintain high-end positioning?